Thursday, August 13, 2015

Recent Buy VI



I analyzed 3M (MMM) back in June.




Back then, I thought it was a little expensive. When it finally dipped to the low 150’s. I made my initial purchase at $153.




I still thought it was a little expensive, but it was a good initial position to average down. It looks like 3M is dipping with the market and I found an opportunity to average down my cost basis.



About 3M


3M is a diversified manufacturer with well known products such as Post-It Notes and Scotch Tape as well less known products such as high-tech LCD films etc. 3M is an international company with more than 60% of 3M's total revenue coming from outside the United States.


Divisions are listed below (based on wikinvest):


  • Healthcare (18.6% of sales)
  • Industrial & Transportation (30.8% sales)
  • Consumer & Office (15% of sales)
  • Display & Graphics(13.5% of sales)
  • Electro & Communications (9.8% of sales)
  • Safety, Security & Protection (13.8% of sales)

I’ve updated the criteria table with the new information from M* and S&P Capital IQ - where they’ve upped their ratings to 4 (BUY) and 3(HOLD) respectively.


MMM 8/2015
Area
Criteria
CheckList
Comment
Quality Company
Dividend Growth
>5 years
Yes
57 Years
ROE/Op Margin
Stable
Yes
Stable
Long term Avg Growth
Stable
Yes
Stable
FCF over Dividends
Yes
Yes
FCF covers Dividends
M* Moat
Wide Moat
Yes
Wide
M* & S&P
Credit Rating
> BBB+
Yes
AA-
Cash to Debt & Interest Coverage, Debt to Equity
Cash Debt >1 or Interest Coverage > 5
Yes - but TTM Debt/Equity > 50
Cash to Debt 0.41
Interest Coverage 50.25
Debt to Equity 64.87
M* & S&P Stars
> 3 Stars for both
Yes
M* 4 Stars
S&P CapIQ 3 Stars A+
Payout Ratio
<60%
Yes
49.00%
Dividend Growth
& Yield
Dividend Yield
>3%
No
2.80%
Dividend Growth
>5%
Yes
9.70%
Chowder
>12%
Yes
12.50%
Valuation
Yield/Avg Yield
>1.1
Yes
1.22
Dividend Yield Theory Mid Point
Below Mid Point
Yes
Mid Point 155.06
Low Point 103
P/E
Below Mid Point
No
Median 15.75 Current 19.2299
DRRM
~10%
Yes
Assuming 6.5% growth; projected return=10.69%
M* Estimate
<M* est
Yes
M* 160
S&P Estimate
< S&P cap IQ est
Yes
S&P Cap IQ 155


Transaction Details


Security
Price
Quantity
Amount
MMM
146.80
10
1468+fees


This will add an estimated $41 forward dividends per year.


Did you make any recent buys? What do you think of 3M?

D4s

8 comments:

  1. Slow down D4s, are you trying to buy the entire stock market?

    On a serious note good buy. I'm into the market for 3M myself for the safety and security but I am currently hoarding cash for next month. Rate hikes + death cross are starting to make some people panic.

    ReplyDelete
    Replies
    1. Mr. Broke investor,
      I am trying to be like you. Actually, for the next few weeks, I really need to slow down since I have some insurance and property taxes to pay. The joy of multiple cars and homes ownership :)
      D4s

      Delete
  2. Nice buy D4S...we purchased MMM last month closer to $150. Also, way to add another $41 to that passive income stream. This past week, we made purchases in both EMR and POT. I plan to post the details of both buys in an upcoming post. Stay tuned.

    Keep up the momentum. Best wishes and continued success! AFFJ

    ReplyDelete
    Replies
    1. AFFJ,
      Thanks for visiting. I think 3M is hitting its fair value line. I am not sure if it will go south or north but for me, it's a good time to load up.
      I look foward to your EMR and POT buys. I love it when we buy when others sell.
      D4s

      Delete
  3. Good price on A great stock D4s! Congrats on the additional income as well. I just started a position in MMM recently and am excited to see it grow.

    ReplyDelete
    Replies
    1. Adam, I think we are on the same boat - buying our initial positions at similar times. I'm glad to be a fellow shareholder. Actually, this MMM purchase is funded by my BAX/BXLT sell.
      D4s

      Delete
  4. D4s,

    Save some shares for the rest of us! :)

    MMM is a great company. One of the bluest of the blue chips. I can't imagine you'll regret owning a slice of this company over the next few decades.

    Keep it up!

    Cheers.

    ReplyDelete
    Replies
    1. Thanks Jason. Don't worry. There's plenty to go around since a lot of people are selling because of China/Greece/ whatever - which is good for you and me.
      I agree that 3M is a very blue company. It's one of those companies on the expensive aisle.
      D4s

      Delete